easy · Volume Spread Analysis effort-vs-result-spread
A trader sees an up-bar closing on its low on high volume and assumes it is a 'breakout' because the volume is high.
What is the fundamental error in this reasoning?
- Mistaking a narrow spread for a sign of market-maker indecision.
- Assuming that the close position is less important than the open-to-close direction.
- Ignoring the fact that breakouts must always occur on low volume to be valid.
- Failing to recognize that high volume on an up-move often contains professional distribution.
Sign up free to see the explanation and track your rank →
More Volume Spread Analysis effort-vs-result-spread practice
- An equity averages a daily volume of 1,000,000 shares. Today… — How should this volume lev
- An equity is in a steady uptrend. Today, it produces an up-b… — What is the most likely pr
- What exactly is being 'Tested'?
- Which of the following describes 'Falling Pressure'? (SOW 3.7)
- During a market rally, a market-maker expects still higher p… — What does this indicate?
- A stock has been trading in a range between $40 and $45 for… — How would a practitioner ca
- A stock is rising on wide spreads and high volume. Suddenly… — What principle describes th
- An index has been rising steadily for three weeks. Today, th… — How should this activity b